Ad Hoc Expert Group Meeting “Rethinking the Role of National Development Banks” United Nations New York, December 1, 2005 Toru Tokuhisa Resident Executive Director for the Americas 1

Contents 1.Introduction of JBIC 2.JBIC’s Experience with NDBs 3.Lessons Learned 2

1. Introduction of JBIC  Japan Bank for International Cooperation (JBIC) is the sole Japanese governmental financial institution to promote Japan’s economic interchange with foreign countries. 3 １． Introduction of JBIC (1) JBIC’s Functions

Export Loans 6.0%($998mil.) Import Loans 3.0%($509mil.) Overseas Investment Loans 37.4%($6,233mil.) Guarantees 11.3%($1,878mil.) Untied Loans 0.6%($103mi.) ODA Loans 41.6%($6,945mil.) Total Amount US$16,686 Million (\115.00/US$) 4 1. Introduction of JBIC Equity 0.1%($20mil.) (2) Commitments by Financial Facilities (FY2004)

5 (\115.00/US$) 1. Introduction of JBIC (3) Outstanding by Financial Facilities (as of March.31,2005) Export Loans 6.7%($12.2bil.) Import Loans 3.7%($6.7bil.) Overseas Investment Loans 17.1%($30.1bil.) Untied Loans 12.6%($22.9bil.) Guarantees 4.3%($7.6bil.) ODA Loans 54.2%($98.6bil.) Total Amount US$181.7 Billion

6 2. JBIC’s Experience with NDBs ２． JBIC’s Experience with NDBs (1) Overview  Some of JBIC’s finance for emerging/developing countries have been extended through governmental financial institutions such as national development banks as well as private financial institutions when relevant (effective “intermediary” and “Two-Step Loans”).  As JBIC itself is a “bank”, it has been reasonable and convenient to have a counterpart familiar with financial transactions in a recipient country (using the common “language”).  Different types of JBIC’s facilities have been mobilized to support long-term financing in emerging/developing countries (ODA Loans, Export Loans, Investment Loans, Untied Loans)

7 2. JBIC’s Experience with NDBs (2) Past Results  ODA Loans ・ Available Data: 1987 ~ Countries, 21 Institutions, 63 Cases Amount of Commitments: $5.3 Billion (\115/$)  International Financial Operations ・ Available Data: 1993 ~ Countries, 29 Institutions, 61 Cases Amount of Commitments: $10.1 Billion (\115/$) Plus: 3 Regional Development Banks 6 Cases, Amounting $387 Million (\115/$)

8 2. JBIC’s Experience with NDBs (3) Major Recipients-1 Major Borrowers/Implementation Institutions  ODA Loans China The Export-Import Bank of China The Philippines The Development Bank of the Philippines The Land Bank of the Philippines Indonesia Bank Indonesia Vietnam State Bank of Vietnam Thailand IFCT-Industrial Finance Corporation of Thailand Bank for Agriculture and Agricultural Co-operatives Small Industry Finance Corporation Krung Thai Bank

9 2. JBIC’s Experience with NDBs Major Borrowers/Implementation Institutions  ODA Loans (Continued) Malaysia Development Bank of Malaysia (former Infrastructure Development Bank) Industrial Bank of Malaysia Malaysian Industrial Development Finance Bank Malaysian Agriculture Bank Bangladesh Grameen Bank India ICICI Bank Small Industries Development Bank of India Sri Lanka National Development Bank Central Bank of Sri Lanka (3) Major Recipients-2

10 2. JBIC’s Experience with NDBs Major Borrowers/Implementation Institutions  Export Loans, Investment Loans and Untied Loans China The China Development Bank Korea The Export-Import Bank of Korea Industrial Bank of Korea The Korea Development Bank The Philippines Development Bank of the Philippines Thailand Export-Import Bank of Thailand IFCT-Industrial Finance Corporation of Thailand Malaysia The Industrial and Technological Bank of Malaysia Development Bank of Malaysia(former Infrastructure Development Bank) (3) Major Recipients-3

11 2. JBIC’s Experience with NDBs Major Borrowers/Implementation Institutions  Export Loans, Investment Loans and Untied Loans (Continued) India Industrial Development Bank of India State Bank of India ICICI Bank Kazakhstan The Kazakhstan Development Bank Turkey The Export Credit Bank of Turkey South Africa Development Bank of Southern Africa Industrial Development Corporation of South Africa Mexico Banco Nacional de Comercio Exterior (BANCOMEXT) Nacional Financiera (NAFIN) Banco Nacional de Obras y Servicios Publicos (BANOBRAS) (3) Major Recipients-4

12 2. JBIC’s Experience with NDBs Major Borrowers/Implementation Institutions  Export Loans, Investment Loans and Untied Loans (Continued) Colombia Instituto de Fomento Industrial Banco de Comercio Exterior de Colombia Brazil Banco Nacional de Desenvolvimento Economico e Social(BNDES) Argentina Banco de la Nacion Argentina Peru Corporacion Financiera de Desarrollo  Regional Development Banks BCIE (Banco Centroamericano de Integracion Economica) BLADEX (Banco Latino Americano de Exportaciones) CAF (Corporacion Andina de Fomento) (3) Major Recipients-5

13 2. JBIC’s Experience with NDBs  ODA Loans Industrial Development Agricultural Development Rural Development Development of SMEs Environmental Protection  International Financial Operations (Export, Investment, Untied Loans) Import of Capital Goods and Services from Japan Financing FDIs from Japan Industrial Modernization Financing for Export-Oriented Industries Financing for Capital Investments of Private Manufacturers Development of SMEs Infrastructure Development (4) Major Purposes of JBIC’s Loans

14 2. JBIC’s Experience with NDBs (5) Case Studies-1  Plantation Reform Project in Sri Lanka Purpose: providing long-term loans via financial institutions to privatized regional plantation companies(PRCs) to improve their productivity and management Amount: \4,076 mil.( ≒ $35 mil.) Type: ODA Loan (Two-Step Loan) Borrower: The government of Sri Lanka→Central Bank→Participating Financial Institutions→PRCs Co-finance with Asian Development Bank Donors (JBIC/ADB) Sri Lankan Government (Central Bank) Participating Financial Institutions End Users (Privatized RPCs) \/$Rs.

15 2. JBIC’s Experience with NDBs (5) Case Studies-2  Rural Development Credit Project in Bangladesh Purpose: to assist the landless rural farmers providing unsecured credits for production capital such as wells, machinery, etc. and to bolster the financial structure of a micro-credit bank (Grameen Bank) Amount: \2,986 mil.( ≒ $30 mil.) Type: ODA Loan (Two-Step Loan) Borrower: The government of Bangladesh→Grameen Bank→Rural Farmers JBIC Bangladeshi Government Grameen Bank \Taka Rural Farmers Taka

16 2. JBIC’s Experience with NDBs (5) Case Studies-3  Infrastructure Development Loan in Malaysia Purpose: to support financing for public/private infrastructure projects in logistics and ICT fields in Malaysia Amount: \35.4 bil.( ≒ $308 mil.) Type: Untied Loan (Two-Step Loan) Borrower: Development Bank of Malaysia(BPMB-former Infrastructure Development Bank)→Public/Private institutions engaged in infrastructure projects in logistics and ICT fields Co-finance with Japanese commercial banks JBIC+ Commercial Banks BPMBEnd Users \M$

17 2. JBIC’s Experience with NDBs (5) Case Studies-4  Investment Loan in Mexico Purpose: to support long-term financing for Japanese FDI companies in Mexico Amount: $60 mil. Type: Investment Loan (Two-Step Loan) Borrower: Banco Nacional de Comercio Exterior(BANCOMEXT) →Mexican private companies with Japanese FDI Co-finance with Japanese commercial banks JBIC+ Commercial Banks BANCOMEXTEnd Users $$ Japanese Company FDI

18 3. Lessons Learned 3 ． Lessons Learned  Past experience shows such importance of dealing with NDBs and other local financial institutions as: ・ facilitation and increase of long-term financing, ・ utilization of expertise as financial institutions, ・ capturing wide range of participants(customers), ・ mitigating the credit risks of end-users, ・ capacity-building of such financial institutions, etc. But, there are issues to be addressed such as:

19 3. Lessons Learned  Issues to be addressed: Enhancement of credit-worthiness of such financial institutions to increase the number of eligible institutions →capacity-building for credit analysis and preparation of data base of credit risks Increase of capacity of such financial institutions to deal with internationally-accepted financing practices →capacity-building seminars and trainings Enhancement of capacity of such financial institutions to analyze environmental and social impacts of projects to be financed →“Category FI” of JBIC’s “Environmental Guidelines” Development of local financial and capital markets to mobilize local savings and increase foreign investments →improvement of legal framework, liberalization of banking industries, development of institutional investors and rating agencies, etc.

20 Thank you for your kind attention. JAPAN BANK FOR INTERNATIONAL COOPERATION